International Journal of Teaching, Learning and

Education (IJTLE)
ISSN: 2583-4371
Vol-2, Issue-4, Jul-Aug 2023
Journal Home Page: https://ijtle.com/
Journal DOI: 10.22161/ijtle

History and Growth of Merger and Acquisition

Nikhil Gayaprasad Saroj, Dr. Kartikey V. Koti

Research Scholar, Sunrise University, Alwar, Rajasthan, India

Professor, Sunrise University, Alwar, Rajasthan, India

Received: 04 Jul 2023, Received in revised form: 07 Aug 2023, Accepted: 15 Aug 2023, Available online: 26 Aug 2023

Abstract
Almost all management students have taken an interest in the topic of mergers and acquisitions. In an effort to
delve deeply into the phenomena of mergers, amalgamations, acquisitions, and takeovers, this study aims to
provide its findings. This research aims to examine the development and evolution of merger and acquisition law.
Changes in India's Economy Due to Global Developments Trends in Mergers and Acquisitions: Lessons from India
Mergers and acquisitions have contributed to a greater degree of internationalization of the global economy,
which is one of the most crucial factors in the present situation.
Keywords— Growth, Companies, India Merger and Acquisition (M&A).

I. INTRODUCTION Federal Trade Commission or the U.S. Department of

The term "mergers and acquisitions" (M&A) refers to Justice's Antitrust Division before proceeding with any
deals in which one firm or business organization merger or acquisition of a certain size. The United States
acquires another, or merges its operations with those of in the late 19th century is often where M&A histories get
another. Strategic management often includes mergers their start. However, mergers have always occurred at
and acquisitions because of the ways in which they may the same time as corporations have existed. The East
affect company size, focus, and competitive standing. India Company, for instance, combined with a former
When two companies legally combine into one, this is rival in 1708 in order to regain its monopoly over
called a merger, but when one company buys out commerce with India. The Italian banks Monte dei
another's shares, stock, or assets, this is called an Paschi and Monte Pio merged to become the Monti
acquisition. When two CEOs agree that merging their Reuniti in 1784.
firms is for their mutual benefit, they may use the term The Hudson's Bay Company and its main competitor, the
"merger of equals" to describe the transaction. The North West Company, united in 1821. From 1895
difference between a merger and an acquisition is not through 1905, the United States had a corporate
always evident from a legal and financial perspective, phenomenon known as the Great Merger Movement.
since both involve the consolidation of assets and During this period, weaker companies merged with
liabilities under one organization. comparable ones to build strong, market-dominating
Most nations have antitrust or competition laws that corporations like the Standard Oil Company, which at its
mergers and acquisitions must follow. Mergers and peak dominated the oil refining business worldwide by
acquisitions that "substantially lessen competition" or a wide margin. More than 1,800 of these companies are
"tend to create a monopoly" are prohibited by the thought to have vanished as a result of mergers and
Clayton Act and the Hart-Scott-Rodino Antitrust acquisitions, with many of the surviving companies
Improvements Act, respectively, in the United States, acquiring significant market shares. Trusts were the
and companies must obtain "pre-clearance" from the means of transport used. Twenty percent of GDP in 1900

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was the value of companies acquired via mergers. The many financial metrics, including ROE, ROA, Net Profit
value increased from 3% of GDP in 1990 to 10%-11% of Ratio, YOY Yield on Advance, and YOY Yield on
GDP in 1998-2000. The technological advancements of Investment. Earnings per share, profits per employee,
their products, patents, and brand recognition by and sales per worker have all increased, however,
customers allowed companies like DuPont, U.S. Steel, following the merger. Assets, equity, investments, and
and General Electric that merged during the Great advances at all banks have grown after the merger, but
Merger Movement to maintain their dominance in their their yields have fallen as a result of underutilization. In
respective sectors through 1929 and, in some cases, fact, thanks to better management of scarce human
even today. resources, both output and profitability per worker are
Competitors to DuPont and General Electric in terms of up. Using Comparative Analysis, the study evaluates the
market share existed in 1905, and they lacked the acquirer bank's financial performance in relation to the
advantages enjoyed by those firms. In 1929, the market banking sector as a whole. Both the Yield on Advances
share of large corporations like International Paper and and the Yield on Investment have decreased for Bank of
American Chicle plummeted as smaller competitors Baroda and Oriental Bank of Commerce after the
banded together to form formidable new rivals. merger. Both State Bank of India and IDBI Bank have
Companies that combined were large-scale better revenue and earnings per worker than the
manufacturers of consistent products that could benefit banking sector as a whole.
from economies of scale. Furthermore, a lot of these Mishra, Pulak. (2019). This article analyzes the impact
mergers required a lot of money to complete. These of mergers and acquisitions (M&As) on the bottom lines
newly amalgamated businesses had an incentive to keep of Indian companies since the beginning of reforms in
production going and lower prices when demand 1991. Due to the multidirectional structure-conduct-
dropped because of their large fixed costs. However, performance linkages, it is found using panel data and
"quick mergers" tended to be the norm. These "quick the difference GMM approach that market concentration
mergers" combined enterprises with very distinct and M&As have no effect on the financial performance
management structures and technologies. Therefore, of enterprises. Capital intensity, marketing and
there was no evidence of the efficiency advantages often distribution activities, and the adoption of foreign
seen after mergers. technology have all contributed to the performance gaps
amongst industries. Financial performance is affected
by market structure, which in turn is influenced by
II. REVIEW OF LITERATURE
enterprises' business strategies, efficiency, and
Satapathy, Debi & Kaushik, K. (2022). Using a sample competitiveness. The results call for a reevaluation of
of 383, this research empirically examines the financial competition regulations and legislation, international
performance of the acquiring firms in the Indian setting commerce, investment, and technological advancement.
using cash flow and financial ratio indicators from 2004
Aggarwal, Puja & Garg, Sonia. (2019). Merger is a
to 2014. Once again, the cash flow metrics are
technique for corporate reorganization that has far-
implemented after modifying the standard for the sector
reaching effects on many aspects of a company's
and the method used by the company. Using metrics of
performance. The purpose of this research is to analyze
cash flow that account for differences across industries,
the expansion of M&A deals in India over the last two
the authors conclude that the performance of the
decades and the results of the merger on the accounting
acquiring business declines after a merger or
performance of the acquiring firm. To accomplish so, we
acquisition. To the best of my knowledge, the research
assess the effect of 68 mergers that occurred between
is the first to employ both an industry-adjusted and a
2007-08 and 2011-12. The accounting metrics for
matching company technique to examine the acquiring
success are broken down into profitability, liquidity, and
firm's performance before and after a merger in the
solvency, for a total of seven metrics. Five years before
Indian setting, using data from three years before and
the merger, financial results are contrasted to those five
three years after the merger.
years after the fact. Three years before and after the
Patel, Ritesh. (2018). This article looks at the long- merger, the same analysis is performed. Seven
term profitability of selected Indian banks from 2003- parameters are averaged before and after the merger,
2004 to 2013-2014, before and after a merger. Several and the results are compared numerically and
metrics are used to assess the business's bottom line. statistically using a paired sample 'test. The businesses
Results showed that mergers had a negative effect on were also classified as either manufacturers or service

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Saroj and Koti, Int. J. Teach. Learn. Educ., 2023, 2(4)
Jul-Aug 2023

providers to examine how the merger will affect each obstacles, the fusion and procurement sectors have
distinct industry. Our research shows that after five shown their efficacy by expanding into new regions,
years, a merger greatly improves a company's acquiring new materials and knowledge, achieving
profitability and liquidity but has no discernible effect economies of scale, and strengthening their viability via
on the solvency situation of the acquiring business. important mixings. With a total average of 36%
Firms in the service industry have been doing better compared to 31% in 2016, cross-border mergers and
than manufacturers and have begun to demonstrate acquisitions have maintained value over the last two
considerable improvement in accounting variables over decades. As Chinese companies have looked for
the medium term. The material presented in this page is investment possibilities in the US and the United States,
guaranteed to be completely unique. they have succeeded above their expectations and made
Roopesh & Sandhya, (2022). Mergers and significant contributions to the growth of the fusion and
acquisitions among publicly-owned financial acquisition sectors.
institutions are a new development in the banking
industry. Reform initiatives that include mergers and
acquisitions in the banking industry aim to boost
financial stability, streamline operations, and maximize
synergies. The profitability, solvency, investment, and
liquidity of the banks both before and after the merger
were primary foci of the study. A variety of factors,
including mergers, acquisitions, and success rate, were
investigated for this study. The primary goal was to
analyze the results of synergy on the efficiency and
profitability of financial institutions. It was an
exploratory study aimed at learning about the reasons
for mergers and tracing their effects. Ratio analysis and Fig.1 Global M&A Activity
a paired t-test were used to compare the situation
before and after the merger. According to the findings,
The effects of political and financial factors on
certain financial institutions may benefit from the
merger and acquisition. Some financial institutions, worldwide merger and securing expansion were
undeniable in 2016.
however, are adapting slowly to the synergy. The
purpose of bank mergers is shown to have a significant Mergers and Acquisitions in India
impact on the resulting synergy. The findings show that Darvin's rule of stamina is no longer applicable; the rule
non-performing assets (NPA), debts, assets, and market of thumb should be the strategist's tolerance, as shown
share variations across banks all contribute to their by humanity's longevity on Earth. Coalitions play a vital
different rates of adjusting to the mergers and role in Indian society. Since the time of the great epics
acquisitions. The current global epidemic may possibly the Ramayan and the Mahabharata, monarchs have
be contributing to the delay in response.. used a wide variety of tactics to extend their territories.
From eastern Bengal and Assam to western Kashmir
III. HISTORY AND GROWTH OF MERGER AND and Nepal, Chandragupta Maurya's dominion in
northern India has grown. The marriage of Akbar the
ACQUISITION
emperor to Jodhabai is well-known as a means by which
Mergers and Acquisitions Global Trends their territories were preserved. In terms of marital
In 2016, its versatility was on display at the $3.9 trillion conspiracies, Rajputs fared well. Mergers and
global fusion and acquisition event. while an increase in acquisitions (M&A) are often positioned as secondary to
the number of policy bombshells, worldwide fusion and these actual strategic alliances in the corporate world.
acquisition (17 369 schemes and 3,2 trillion dollars US) In 1921, the Calcutta Bank, the Bombay Bank, and the
has been the third greatest preparation capability since Madras Bank merged to become the Imperial Bank of
2007 (3,7 trillion dollars US), while being 18.1 India. The Indian economy also saw significant changes
percentage points lower than in 2015 (18 039 schemes during World War II (1939-1945) due to the country's
and 4 trillion dollars USA). A dissection of the fusion and political climate. During World War II, several Indian
acquisition trend reveals its underlying nature. Despite businesses benefited greatly from inflation. The

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Jul-Aug 2023

businesses expanded until they had their own factories. example of this kind, the acquisition of Goodbye Coffee
There was instant rage. When British agencies realized by the US-based Eight O'clock, is around 2.5 times larger
that India would soon be free to sell its properties to than the previous one. In 2002 and 2003, Indian
indigenous groups, they entered an M&A boom companies heavily invested in international purchases.
following World War II. Natsteel, a subsidiary of ONGC Ltd., paid $486 million9
Banks, jutes, petroleum, materials, sugar, tea estates, to ONGC Videsh in Angola and Tata Steel in Singapore
etc. all saw many mergers and acquisitions. Duncan for a 50% stake in the offshore oil blockade. In 2004,
Brothers and Octavius Steel are two British companies telecom mergers and acquisitions were quite
that the Goenka group has acquired. In 1956, some 200 prominent. Idea's purchase of Escotel in June 2004
insurance firms and rapid social orders that had triggered the switch-out mode for telecom transactions
previously been affiliated with the Oriental Life in both circumstances. Got any crazy game plans?
Insurance Corporation merged to become the Life Hutch-Aircel and Idea's share transaction with
Insurance Corporation of India. Singapore Telemedia has mitigated regulatory hurdles.
After Hutchison Essar's acquisition of BPL Mobile,
M&A activity, for instance, moved at an exceptionally
cellular connections for drivers were made available.
slow pace prior to the 1990s. The number of mergers
There has been a rise in the number of contracts as well
and acquisitions was smaller than the Industrial
as their total value across several sectors, including the
Licensing Policy in accordance with the Industrial
pharmaceutical, programming, and IT-enabled
Improvement and Regulation Act of 1951 and the
authority.
Foreign Exchange Regulation Act of 1973. Most
businesses are controlled by banks and other financial • The Trend in India
organizations, while private marketers have a major Four major mergers and acquisitions took place in India
presence in government. While the government has this year, and Forbs attributes this to the country's
made some positive changes to regulation, such as plethora of liquid assets, gradually rising prices,
nationalizing the insurance undertaking and forward-moving energy and innovation, and political
announcing new provisions allowing tax reliefs in factors (mostly in the United States). Harsh
Finance Bill 1967, conglomerates have dominated the management and a progressive reward for
business landscape for the most part. The structural entrepreneurial growth, impoverishment to minimize
changes provided by the government in 1991, which reversal or future reconciliation dependence on
included liberalization, privatization, and globalization, exposures to building systems, tax value, troublemaking
were the main energy source for M&As in India. The transactions, and flat mix office support are key.
goal of the economic reforms was to boost competition,
productivity, and growth by removing barriers to trade
and encouraging unregulated speculation. But this was
a peak time for Indian businesses, and the strongest
among them showed remarkable resilience. Indian
businesses relied on high-quality, adequate products
and services from distant sources, therefore they had to
build thorough plans to ensure their long-term viability. Fig.2 Recent M&A Activity in India
However, Indian businesses rely significantly on M&A
and other inorganic manufacturing strategies. The single most important number since 2010; the all-
Consolidation and subsequent growth in innovations in time high value of USD 56.2 billion. This marks a new
the concrete sector between 2000 and 2011 indicated high point. Due to ineffective leadership and political
lessening competition in the market. The concrete behavior, the yearly reversal between the United States
industry merger picked up steam when Gujarat Ambuja and Western Europe was observed in 2016.
purchased Raymond's concrete operations, as well as The government's policies are largely responsible for
DLF Cement and its subsidiary, Ambuja Cement India. this outcome. In 2016, the Indian acquisition and fusion
Significant agreements also include Tata Tea's sector was worth US$ 25.1 billion, with domestic
acquisition of the British company Tetley and the activity accounting for the vast majority of both volume
combination of Propack AG and Essel Packaging. The and value (505 schemes). The 2015 grading procedure
acquisition of much bigger international corporations is benefits from this by 5 percent. According to Ernst &
another well-known trend in Indian M&A. Another

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Saroj and Koti, Int. J. Teach. Learn. Educ., 2023, 2(4)
Jul-Aug 2023

Young (2017), the oil and gas, banking, concrete, 1. Expansion

construction, pharmaceutical, and foundation-trained The two cultures often fuse into one during the wedding
product sectors were the primary backers of merger and ceremony. In most cases, the happiness of a group can
acquisition activity in India. These mergers were driven be traced back to a single romantic event that leads to
mostly by a desire to participate in the industry's the union of at least two distinct components. Alliances,
growth, share risks, and reap financial benefits (via mergers, private placements, and joint ventures are all
mechanisms like cooperative energy production, for examples of expansion deals.
instance).
a. Merger
In order for a merger to occur, at least two companies
must join together, with one ultimately failing and the
other ceasing to exist.
b. Acquisition
Acquisition is the final product, the land. Ownership of
Real Estate Acquisition, in the context of mergers and
market combinations, refers to the purchase of a
Fig.3 M&A recent behavior in India
controlling interest in one firm by another company in
exchange for cash.
• Mergers and Acquisitions Trends – The c. Leasing Offer
Indian Experience
A fragile offer is made when one firm wants to exert
India's merger and acquisition sector has been robust pressure on another by asking its shareholders to limit
and predictable as of late, despite nearly the use of their stock in the company or to exercise
insurmountable global corporate resistance. The heart extreme caution while allocating their stock.
of the Indian economy and the demand for global
d. Joint Undertakings
prosperity are the primary reasons for the country's
unprecedented achievement. In 2016, 362 international In a joint endeavor, the disputing companies only need
transactions totaled US$ 31.1 billion. When it comes to to make a temporary change to their business practices,
international mergers and acquisitions, the United generally for a few years. There will be a lot of
States has been a staunch advocate. moneymaking and speculating going on during the
gatherings using diverse materials.
• Forms of Corporate Restructuring
2. Sell-Offs
Divestments and spin-offs are types of sell-offs.
a. Divestitures
Divestment refers to the sale of an internal business unit
to an outside party. Acquiring or using capitalist ways of
thinking. The purpose of this purchase by a preexisting
business is to prevent the disclosure of any novel legal
facts. It incorporates value decrease and solely discusses
growth in regard to the acquiring firm.
• Equity Carve –
Out Equity Carve was an additional set of spinoffs. A
share of the company must be sold to the untouchables.
Those who can't be touched are rewarded with new
value shares so they may claim ownership of the
successful business unit.
b. Spin–Offs
Fig.4 Forms of Corporate Restructuring The original shareholders of the parent company are
acquired by a different legal entity on the basis of an

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Saroj and Koti, Int. J. Teach. Learn. Educ., 2023, 2(4)
Jul-Aug 2023

asset rate. The present corporation's established [5] , Roopesh & Sandhya, (2022). Will Mergers and
shareholders have an ownership stake roughly equal to Acquisition Vacillate the Performance of Banks? A Case
that of the original organization. It has both a dividing Study of Public Sector Banks in India. Binus Business
Review. 13. 191-202. 10.21512/bbr. v13i2.7928.
line and a dividing line below.
[6] Mishra, P., & Jaiswal, N. (2012). Mergers, Acquisitions and
• Split-Off Export Competitiveness:
A break is a subset of the turn. Some of the current [7] Experience of Indian Manufacturing Sector, Journal of
Competitiveness, 4(1), 3-19.
owners are buying up shares in a subsidiary in return
https://doi.org/10.7441/joc.2012.01.01
for stock in the main firm.
[8] Mishra, P., & Rao, U. S. (2014). Concentration vs.
• Split–Up Inequality Measures of Market Structure: An Exploration
of Indian Manufacturing, Economic and Political Weekly,
The whole corporation has been split off in a series of
49(33), 59-65.
spin-offs in an effort to avoid ever having to deal with [9] Mishra, P., & Jaiswal, N. (2017). The Impact of Mergers
the parent company again. and Acquisitions on Firms’ Export Competitiveness:
3. Corporate Control Experience of Indian Pharmaceutical Industry”, South
Asian Economic Journal, 18(1), 1-20.
Corporate law refers to a field of law dealing with a [10] Mishra, P. (2018). Are Mergers and Acquisitions
subset of legal problems. They have no trouble paying Necessarily Anti-Competitive? Empirical Evidence of
for upgrades, but they resist learning and - transitions Indian Manufacturing Sector, Margin, 12(3), 276-307.
and intermediate issues. [11] Equimaster. (2020). Banking sector analysis report.
Retrieved from research-it/sector-info/bank/Banking-
4. Changes in Ownership Structure
SectorAnalysis-Report.asp
The fourth set of modifications to the ownership [12] Figueiras, I., Gardó, S., Grodzicki, M., Klaus, B., &
arrangements is a shift. Included are both new and used Lebastard, L. (2021). Bank mergers and acquisitions in
purchases, as well as sales to groups and individuals. the Euro area: Drivers and implications for bank
performance. Retrieved from
[13] Gomes, E., Angwin, D. N., Weber, Y., & Tarba, S. Y. (2013).
IV. CONCLUSION Critical success factors through the mergers and
The concept of mergers and acquisitions became a acquisitions process: Revealing pre- and post-M&A
connections for improved performance. Thunderbird
reality in India after being approved by relevant
International Business Review, 55(1), 13–35. https://
regulatory organizations. Whether or not a merger or
doi.org/10.1002/tie.21521
acquisition is successfully completed may depend on a [14] Goyal, K. A., & Joshi, V. (2011). Mergers in banking
number of factors, including the strategy of the Board, industry of India: Some emerging issues. Asian Journal of
the adaptability of the intervention period, and the Business and Management Sciences, 1(2), 157–165.
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W. A. (2014). Do mergers and acquisitions vacillate the
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